Samsung’s generic competitive strategy and intensive growth strategies set business goals for technological innovation as a critical factor in developing competitive advantages. Headquartered in Korea, the conglomerate competes with technology-intensive firms, such as Apple, Google (Alphabet), Microsoft, Sony, and Intel, which create strong competitive forces, as determined through a Five Forces analysis of Samsung. The industry environment imposes aggressive competitive behavior that typically involves rapid technological innovation for product differentiation, as seen in the evolution of smartphones available in the global market. To effectively compete, Samsung’s generic competitive strategy and growth strategies must involve investment in technological innovation. The resulting competitive advantages enable the company to keep its competitive position as one of the best performers in the semiconductors, consumer electronics, and home appliances industries. Samsung’s generic competitive strategy and intensive strategies for growth are suited to the current business environment and the strategic positioning of the multinational organization’s operations.
The generic competitive strategy and intensive growth strategies of Samsung Group permeate its entire organization, influencing the strategic choices and implementations of its divisions and subsidiaries. The Group’s unitary leadership is responsible for the corporate strategic direction and competitive advantages of the conglomerate and its technology-focused subsidiaries. Samsung’s generic competitive strategy and intensive growth strategies are observable in product design, marketing strategies, and the business organizational development direction of subsidiaries.
Samsung’s Generic Competitive Strategy (Porter Model)
Samsung applies broad differentiation as its generic competitive strategy. Based on Michael E. Porter’s competitive strategy model, the strategic objective of broad differentiation is to maintain competitive advantage by providing unique (or differentiated) products targeting a wide market, which in this case is industry-wide, involving practically every person or group that buys smartphones, laptops, and other equipment. To achieve Samsung’s strategic plans for growth and expansion in the global market, this generic competitive strategy requires the application of product development as a main intensive growth strategy to compete with other technology firms.
Samsung’s investments in product development are a strategic implication of differentiation as its generic competitive strategy. For example, the company invests in technological innovation to support the competitive advantage of its products in the consumer electronics market. Another implication of this generic competitive strategy is Samsung’s marketing mix (4Ps) and related strategies that promote products as unique or different alternatives to the majority of competitors. This marketing approach and technological innovation sustain the corporation’s competitive advantages and value chain effectiveness in satisfying customers’ needs in consumer electronics, computing technology, and home appliances.
Other generic competitive strategies, such as cost leadership, differentiation focus, and cost focus, are also applied in Samsung’s operations, but to a limited extent. Cost focus leads to the company’s being the best-cost provider in some segments of the semiconductor and electronic components markets. The limited application of cost focus still comes with innovation standards that reflect Samsung’s main generic competitive strategy of broad differentiation. These generic strategies align with the company’s intensive growth strategies to succeed in sustaining the technology firm’s competitive advantages.
Samsung’s Intensive Growth Strategies (Ansoff Matrix)
Market Penetration (Primary). Samsung’s revenue growth depends on market penetration as the primary intensive strategy. In Igor Ansoff’s matrix, the strategic objective of market penetration is to grow the technology business by increasing its revenues from the sale of current products in current markets, such as the European Union’s consumer electronics market, where the corporation already has operations. Competitive advantages and business strengths identified in the SWOT analysis of Samsung combat negative forces from competition in these markets. As an intensive growth strategy, market penetration depends on the effectiveness of the generic competitive strategy of broad differentiation, in terms of how the company creates technologically innovative products that are differentiated enough to attract target customers in current or existing markets.
Product Development (Secondary). Considering the emphasis of product superiority in Samsung’s corporate mission and vision statements, product development is a major intensive growth strategy of the enterprise. A strategic objective of product development in this case is to grow the business through new products, such as new electronic gadgets. Also, this intensive strategy grows Samsung’s operations through iterative innovation, which leads to improved versions or variants of existing products. For example, the company regularly rolls out new smartphone models, similar to what competitors are doing in their product development strategy. The implementation of product development as an intensive growth strategy is based on Samsung’s generic competitive strategy of differentiation, which requires product development for uniqueness that differentiates the business from the competition. Economies of scope based on the conglomerate’s various subsidiaries support product development and competitive advantage by providing technological expertise and material inputs from the subsidiaries. Samsung’s organizational culture (work culture) affects human-resource support for operational effectiveness, value chain efficiencies, supply chain management, and other business activities that fulfill the strategic objectives of product development.
Market Development. The global scale of Samsung’s operations makes market development a minor intensive strategy for business growth. Market development’s strategic objective is to enter new markets using the company’s existing products, such as introducing new Galaxy tablets in Latin American markets after these products’ introduction in the United States. As an intensive growth strategy, market development’s success depends on product value and competitive advantage, which in this case comes with Samsung’s generic strategy of differentiation via technological innovation. For example, effective innovation for cutting-edge technological design makes the corporation’s products more competitive when rolled out in target markets. With this intensive growth strategy, introducing products to new markets may come with changes in the geographical units of Samsung’s organizational structure (company structure).
Diversification. Samsung’s diversified business operations maintain multiple revenue channels and spread risk across industries and markets. This intensive growth strategy’s implementation is infrequent in the technology conglomerate, considering regulatory hurdles and other barriers. With the strategic objective of establishing new profitable businesses, the diversification strategy grows Samsung typically through acquisitions of smaller firms, such as Harman International Industries. The minor role designation of this intensive growth strategy limits the risks of establishing new business operations. In implementing diversification, the generic competitive strategy of differentiation is also applied for competitiveness and strategic alignment among Samsung subsidiaries’ business operations.
Some Considerations – Samsung’s Generic Competitive Strategy & Intensive Growth Strategies
Samsung’s generic competitive strategy and intensive growth strategies direct the organization’s growth and development. Differentiation plays a major role in building the company’s competitive advantage, although other generic competitive strategies, such as cost leadership and focus strategies, also support the technology enterprise and its competitiveness. Samsung’s operations management strategies and administration must align with the differentiation generic competitive strategy and the intensive growth strategies to support business growth while competing with aggressive multinational companies.
References
- López, D., & Oliver, M. (2023). Integrating innovation into business strategy: Perspectives from innovation managers. Sustainability, 15(8), 6503.
- Samsung – Brand Identity.
- Samsung R&D Center.
- Samsung Catalyst Fund.
- Taherdoost, H. (2023). An overview of trends in information systems: Emerging technologies that transform the information technology industry. Cloud Computing and Data Science, 1-16.
- U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry.